Panel: States need to fix tax policy

Posted: Saturday, June 24, 2006

ATLANTA - Just as Southern cooking with lots of lard and butter isn't necessarily healthy, the way Southerners are taxed might not be the best way to raise money for government, a think tank said Friday.

The Center for a Better South released a 128-page proposal for how states like Georgia could make taxes fairer while ensuring funding for vital services like public education and health care.

"This is not necessarily about raising taxes," said Andy Brack, president of the center.

Instead, the study includes 11 ideas for reforming tax structures, including getting rid of many sales-tax exemptions, raising the cigarette tax to the national average of 92 cents and trying to find a way to make sure property taxes aren't more than people can afford.

Both Georgia and South Carolina fell somewhat short on the group's ideas, having put in place just two of the 11. That's tied for next-to-last among the nine Southern states that have an income tax.

Virginia and North Carolina rated the highest, having both instituted five of the center's proposed reforms.

Getting rid of sales-tax holidays for school supplies and other items and eliminating several exemptions from the taxes were among the ideas that could prove controversial.

Even former governor Roy Barnes, a Democrat who showed up to support the proposal, said he was uneasy with the idea of getting rid of the school supplies holiday. But he supported the idea of getting rid of some of the sales-tax exemptions that he said were fueled by special interests.

"They're mostly (for) whoever had the best lobbyist at a particular time," Barnes said.

The group also said any property tax reform needs to be tied to a person's ability to pay that tax, instead of widespread cuts.

Brack praised Georgia for its Commission for a New Georgia, a panel created by Gov. Sonny Perdue in hopes of reducing waste and encouraging better services.

A similar group in New Mexico has made suggestions the state thinks will save about $500 million by 2009, he said.

Those involved in the effort cautioned lawmakers against picking and choosing among the recommendations, perhaps deciding to pass politically popular tax cuts while leaving behind some of the less palatable increases. That could slice as much as $1 billion in state revenue, said Alan Essig, executive director of the Georgia Budget and Policy Institute, which led the study.